As 2026 approaches, advisors are urged to consider small and mid-cap equities, which have lagged behind large-caps like the S&P 500. Allspring predicts a shift in investor focus towards smaller companies utilizing AI technology. Opportunities may arise for those who reallocate their portfolios from large-caps.

With AI and tech continuing to dominate, companies underweight in tech could face challenges in the upcoming year. Beyond chipmakers and tech giants, sectors like industrials and materials are expected to benefit from AI integration. Companies like Amrize and Gates Corporation are highlighted for their roles in building data centers.

Healthcare, while facing challenges like rising costs and policy uncertainty, offers potential for growth with AI advancement in medicine. AI can improve accuracy in diagnosing and personalized medicine, making it crucial to invest in companies at the forefront of this innovation. Valuations in the healthcare sector have been impacted by post-pandemic changes.

Allspring advises keeping an eye on sectors like industrials and materials, as companies involved in building data centers are expected to perform well in the coming year. Opportunities abound for those who shift their focus from large-cap stocks to smaller players benefiting from AI technology.

Read more at Yahoo Finance: Allspring Sees Big Opportunities for Small- and Mid-cap Equities in ’26